Multimodal transportation infrastructure investment and regional economic development: A structural equation modeling empirical analysis in China from 1986 to 2011

- We developed a structural equation model to comprehensively consider the bi-directional relationship between multimodal transportation investment and economic development.
- Spatial spillover effects are taken into account in the model and verified to exist from the results.
- The magnitude of the economic impacts of multimodal transportation investment differs at the regional level.

It is often hypothesized that transportation infrastructure investment have a positive impact on economic growth and that economic growth also imposes needs for further infrastructure development. This paper proposes a structural equation model (SEM) to comprehensively consider the bi-directional relationship between multimodal transportation investment and economic development. To account for the complicated interactions between transportation investment and economic growth, travel demand is added as an endogenous variable in the model system. In addition, the SEM model system is formulated with variables that reflect transportation supply in geographically adjacent areas to investigate spatial spillover effects. Empirical analysis based on a panel dataset at the reginal level in China from 1986 to 2011 is conducted. Results show transportation investment in the current region or other regions have impacts on economic growth, but are obviously different at national level and provincial level. These differences can be associated with phases of economic development, transportation investment policy, transportation infrastructure service level, spillovers from other regions, as well as reform policies carried out by the central government.